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CBN Loans Account for 62% of FG Revenue.

CBN loans account for 62% of FG revenue.

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CBN loans account for 62% of FG revenue.

 

 

Despite the restructuring plan, the World Bank estimates that the Federal Government will lose about 62 percent of its revenue to interest payments on loans it has taken out from the Central Bank of Nigeria by 2027. NewsReport gathered

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The Washington-based bank made reference to this in its December 2022 Nigeria Development Update. According to the report, “interest payments are projected to steadily increase by 2.4 percentage points of GDP between 2018 and 2027, and by 2027 interest payments will account for over 62 percent of revenues, a” despite a reorganization of the Ways and Means stock in 2023.

 

 

It was recently reported that the Federal Government borrowed N6.31 trillion from the CBN over a 10-month period using Ways and Means Appropriations.

 

 

This pushed the government’s borrowing from the CBN from N17.46tn in December 2021 to N23.77tn in October 2022. The N23.77tn owed the apex bank by the Federal Government is not part of the country’s total public debt stock, which stood at N44.06tn in the third quarter of 2022, according to the Debt Management Office.

 

 

The public debt stock only includes the debts of the Federal Government of Nigeria, the 36 state governments, and the Federal Capital Territory. Ways and Means Advances are loan facilities through which the CBN finances the shortfalls in the government’s budget.

 

 

In November 2021, the World Bank warned the Nigerian government against financing deficits by borrowing from the CBN through the Ways and Means Advances, claiming that this would put fiscal pressure on the country’s expenditures.

 

 

Despite warnings from experts and organizations, the Federal Government has kept borrowing from the CBN to fund budget deficits.

 

 

This online information shows that the Federal Government paid an interest of N2.03 trillion from January 2020 to November 2021 on the loans it got from the CBN through the Ways and Means Advances. It was also reported that the Federal Government paid an interest of N405.93bn from January 2022 to April 2022 on the loans it got from the CBN.

 

 

The Managing Director and Chief Executive Officer of Cowry Asset Management Limited, Mr. Johnson Chukwu, recently said the central bank’s lending to the government was putting pressure on the exchange rate and the inflation rate, with “liquidity that has no productivity attached to it coming into the system.” Last week, the President, Major General Muhammadu Buhari (retd.), transmitted to the National Assembly a request for approval of Ways and Means Advances restructuring to the tune of N23.7tn.

 

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